Giant Killers: Four Businesses That Changed the Customer Experience (And Two That Might)

By Aarthi Rayapura • July 30, 2012

by Brian Bell, CMO

Chief Marketing Officer

Time was, a strong relationship with a customer meant that you had a responsive and courteous technical service hotline. But since the turn of the millennium, the relationship between consumer and product has changed dramatically and so too has the definition of the “customer experience.”

In the beginning years of the 2000s, old industry giants tumbled while dynamic new companies offered newer, deeper connections with their customers. One-size-fits-all products were replaced by adaptive and customizable ones, and traditional business models were thrown by the wayside as the consumer enjoyed unprecedented choice.

We look at six companies that embody this era of change, examining what unprecedented steps they took to reach their customers and what impact they’ve had on their respective industries. Irrespective of their industries, the common trait that all of these gamechangers share is the fact that they exploited the relationship-building benefits that come with the subscription model.

Company: Netflix

Industry: Video Rentals

How they did it: Starting its subscription service in 1999, Netflix won the video rental wars because the Los Gatos-based company anticipated what its customers wanted. Thanks to its Cinematch algorithm, Netflix was able to match what its customers would most likely rent next based on what they had rented previously. Combined with its “Watch Instantly” streaming library content, Netflix was able to adapt to rapidly progressing technology much quicker than its competitors. Whether you’re someone who prefers to get a red-enveloped DVD with the latest blockbusters or you just want to peruse the ever-expanding library of content, Netflix has a package to fit your need. Though the company has encountered recent setbacks, no one can question the impact Neflix has had on the video rental industry.

Company: Amazon

Industry: Online Retail

How they did it: By revolutionizing book purchases and then diversifying their offerings to tackle everything from groceries to music. The company has added numerous subscription services such as Amazon S3 and Amazon Prime which allow customers access to online storage and free shipping/access to streaming media, respectively. The result is more than a mega store, but a wealth of services that allows consumers to customize their experience.

Company: Zynga

Industry: Electronic Entertainment

How they did it: Zynga used the freemium model popularized on the iTunes App Store (thanks to the pioneering efforts of companies like Ngmoco) and paired it with the virality of social media. The result is a set of games that are free to play, but impossible to stop playing. In order to play faster (or acquire “energy”) and get the best stuff, customers have to shell out real money or accept an offer from one of Zynga’s business partners. And like any good piece of media, Zynga games take full advantage of their medium–the Facebook platform. Zynga’s games often require you to aid your friends towards a shared goal– thereby ensuring the games are constantly passed around social circles and creates a personalized, player-specific experience. Compared to the one-time-purchase business model of most publishers, Zynga’s choice to make all games based on a recurring revenue model was a huge revelation. Instead of buying a game once, players pretty much subscribe to Zynga’s games–thereby ensuring their loyalty.

Company: ZipCar

Industry: Car Rental

How they did it: By offering a revolutionary subscription approach to renting a car, ZipCar made urban living much more, well, livable. The first step to ZipCar’s success was the realization that its customers didn’t want to rent a car for a week at a time, but often just needed to borrow it for a few hours. By understanding this unexploited market niche and catering to it, ZipCar flourished. With different pickup/drop off locations, various car models, and 24/7 accessibility, car renting has suddenly become much more attractive for people with a diversity of car needs. Whether you’re a weekly commuter or just looking for an occasional trip to the mountains, ZipCar provides customers with a wealth of options. Meanwhile, ZipCar is able to monetize its relationship with its customers in new and creative ways, adapting to different subscribers’ needs.

Company: Dropbox

Industry: Digital Storage

How they’re doing it: Dropbox hasn’t won the digital storage wars yet; but its pioneering, democratic approach to storage has inspired imitators and put conventional storage giants on notice. Proving “freemium” isn’t just for software, cloud-based digital storage service Dropbox allows customers to upload and share digital content with one another by using file synchronization. But what separates Dropbox from its competitors is the variety of platforms available, making sure that a wide-consumer base can access both the free and paid subscription services. There are other cloud-based digital storage services, and hundreds of conventional storage options, but Dropbox is the most easily adaptable to a customer’s storage needs and whatever platform they prefer. Accessing your data anywhere in the world from any device (and for free) is the wave of the future, and that’s why so many industry insiders have been trumpeting the merits of Dropbox. Instead of buying a physical hard drive with a fixed capacity, Dropbox allows users to subscribe and expand their data needs as needed.

Company: Mint.com

Industry: Online banking

How they’re doing it: By taking web aggregation and taking it to your bills and finances. Mint.com is a free web-based financial subscription service that lets you see all of your financial transactions in one secure, easy-to-understand app. Best of all, customers can customize their budgets so they know exactly where their money is going in any given time period. Still, Mint.com has room to grow in its offerings, especially in what other personalized financial services it can offer its customers. Currently, Mint.com’s revenue comes from recommending highly-personalized financial services and products to its users, but just how profitable this is remains to be seen. But a recent acquisition by Intuit, makers of TurboTax and Quicken, indicates that industry giants in the personal finance world see a real future for Mint.com’s approach, so the best may be yet to come for this brand.